Disney: the movie business is screwed

Disney CEO Bob Iger bluntly states that collapsing sales volumes on DVDs, the film industry’s cash cow this past 10 years, means that the movie business is changing “right before our eyes”.

Not helping matters are sluggish sales of Blu-ray discs, which had been hoped to represent an uplift in the packaged video market, and while BD sales are growing it is nothing like enough to fill the gap left by lost DVD sales.

The other Holy Grail for Hollywood has been digital distribution, via pay-TV and VOD. Those sums are very useful, but again they have not filled the DVD gap. What has caused the financial crisis is the illegal downloading and file sharing of movies and similar content.

Iger says it is time for Hollywood to recognise that the business model is changing. “If we don’t adapt to the change there won’t be a business – that’s my exhortation to my team.” He argues, in a story in the Financial Times, that the solution needed more “research and development, risk-taking…real focus on changing the status quo”.

In an attempt to boost revenues from this sector Disney is introducing ‘Keychest’, a new technology that permits digitised copies of movies to be stored remotely and accessed on multiple devices. Keychest would enable consumers to pay a single price for permanent access to a movie or TV show that could be viewed across on-demand pay-TV, Web and mobile devices. Keychest does not offer downloads, but rather stores copies of video and other related files on a cable provider’s or mobile network provider's servers, and permits access to consumers who have paid the access fee.

However, the executive running Keychest does not anticipate the service moving into profit for some five years.